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Saturday, December 14, 2019

Michael Kohlhass: How “Nonprofit” Charter Schools Make a Profit | Diane Ravitch's blog

Michael Kohlhass: How “Nonprofit” Charter Schools Make a Profit | Diane Ravitch's blog

Michael Kohlhass: How “Nonprofit” Charter Schools Make a Profit



There are many ways in which nonprofit charters make a profit. Most involve complex real estate transactions and such things as “triple net leases” which are hard for the public to understand. Such deals often involve a charter operator owning or leasing the real estate and renting it to the charter school at exorbitant rates, with the public footing the bill.
He describes the case of a charter operator in Los Angeles who sold his “receivables” soon after getting his charter.
Kohlhaas writes:
The idea is very simple. A charter school has guaranteed future income in the form of payments from the state. They sell those payments to a finance company at a discount.
The finance company also charges a transaction fee. So for instance, if a charter has enrollment worth $1,000,000 they might sell those future payments for $980,000 now, which is less 2%. That means that $20,000 of public CONTINUE READING: Michael Kohlhass: How “Nonprofit” Charter Schools Make a Profit | Diane Ravitch's blog